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Airlines stand to save billions of dollars on jet fuel after an interim US-Iran peace deal sent oil prices lower, but passengers are unlikely to see immediate relief as tight capacity may allow carriers to keep fares well above pre-war levels.
The United States market offers the clearest example. Fare increases still lag this year’s run-up in fuel costs, while domestic seat growth remains limited. That gives airlines leeway to use lower fuel bills to rebuild margins rather than reverse recent price increases.
US jet fuel spot prices stood at $2.85 a gallon on June 17, down sharply from an early April high of $4.88. A decline of that size would cut the US airline industry’s annual fuel bill by more than $40 billion if sustained, according to a Reuters calculation based on industry fuel consumption.
As jet fuel prices surged, US airlines raised ticket prices and bag fees, and cut schedules, but those steps have offset only part of the rise in fuel costs.
